This was a shift from Prime Minister Narendra Modi criticising the revdi culture of distributing freebies for votes during elections. In an X post in 2022, he wrote this is “very dangerous for the development of the country”.
In fact, Chief Minister Eknath Shinde Saturday claimed that the polling was in Mahayuti’s favour because of his flagship initiative, the Mukhyamantri Majhi Ladki Bahin Yojana.
“It appears as a tested example, similar to what they did in Madhya Pradesh,” Wankhede told ThePrint. He pointed out that a non-BJP leader—Eknath Shinde—has now independently tried this and managed to deliver the same results.
Wankhede called the implementation of the policy in Maharashtra “extraordinary”.
“If you go anywhere, in any part of rural Maharashtra, you find people benefiting from this policy…Probably that created a stir in Maharashtra, which is probably why this kind of a result is now visible,” he said.
However, experts do also see value in promising “freebies” or offering “welfare schemes” right before elections.
“It is not a bad thing that political parties briefly remember poor people at election time and seek to win their support with promises of social benefits, pejoratively called freebies by the mainstream media,” Economist Jean Drèze told ThePrint.
He said that without this sort of electoral competition, critical social programmes like the National Food Security Act would not have seen the light of day.
But he added a caveat, that “state governments must live within their means”.
“Beyond a point, they are not allowed to borrow, so they have a budget constraint. If they make extravagant promises at the expense of other priorities such as school education or infrastructural investment, they will have to answer for it in due course,” he told ThePrint, adding “We must also remember that many social benefits are an investment of sorts, in so far as they help people to be more productive and enterprising.”
Madan Sabnavis, Chief Economist at Bank of Baroda, explained why such schemes attract voters.
“Social welfare spending in any form appeals to voters as there are direct benefits to be had,” he told ThePrint, asserting that as long as the schemes are targeted to the disadvantaged sections and do not cause fiscal stress these may be welcome given the lower levels of income for a large section.
According to him, the challenge really is to control these outlays.
“At times these benefits may have to be increased once society takes the benefits as given on a permanent basis,” he said.
Also read: Modi slams Congress for ‘unreal promises’ after Kharge’s rebuke to Karnataka leaders over guarantees
‘The people will suffer’
Consistent proliferation of freebies would also significantly impact state finances, according to experts.
Radhika Pandey, associate professor at the National Institute of Public Finance and Policy (NIPFP) and a columnist with ThePrint, said that if these freebies are continued, in the long run, it will lead to an increase in the revenue deficit of the two states. She pointed out that according to Fiscal Responsibility and Budget Management laws of both Maharashtra and Jharkhand, and according to finance commission recommendations, states should gradually move towards a revenue surplus.
“That means, whatever deficit the states have, should be for capital expenditure. But here the deficit of the states would increase for their recurring expenditure, to fund the subsidies and freebies. That would increase the debt burden of the states,” she said to ThePrint.
“So, in all this, the deficit would rise, the debt burden would rise, and in all this, the casualty would be capital expenditure, because revenue expenditure in terms of freebies and subsidies, and the other committed expenditure like salaries and pensions cannot be clawed back now. So, what they will do now is that capital expenditure would be compressed to show that the deficit is lower, and things are fine,” she added.
Pandey, therefore, explained that the long-term implications of these freebies are increasing deficit, increasing debt and compression of capital expenditure.
According to Pandey, another option to deal with the impact of freebies would be for the states to increase taxes, which would ultimately suppress consumption.
“They will have to increase taxes, so the poor will suffer, the middle class will suffer, consumption will be lower, and discretionary spending will be lower,” she added.
The promises
In Maharashtra, the opposition alliance Maha Vikas Aghadi (MVA) also promised several benefits, including Rs 3,000 financial assistance for women across Maharashtra under the Mahalakshmi scheme, waiver of farm loans of up to Rs 3 lakh for all farmers, monthly support of Rs 4,000 for every unemployed youth in Maharashtra, affordable health insurance coverage worth Rs 25 lakh, and free bus rides for women on government buses across the state.
Jharkhand also saw several such promises in the run up to the elections. In August this year, Chief Minister Hemant Soren announced the Mukhyamantri Maiya Samman Yojana, offering Rs 1,000 monthly to women. To counter this, the BJP manifesto promised Rs 2,100 each month under the Gogo Didi Yojana if it is brought to power in the state. This then prompted the Soren government to hike the assistance to women under the scheme from Rs 1,000 per month to Rs 2,500.
D.K. Pant, chief economist at India Ratings, is certain that such promises would continue in the future elections.
“Unfortunately, it is not going to stop, to be very honest. We will have this in each election. Even at the time of national elections, we will have the same comments from political parties…So one has to look at it this way. ‘A’, are they targeted? ‘B’, are they following any purpose?” he told ThePrint.
Pant explained that any benefit which is universal “is a bad thing, because there will be a lot of leakages”. “People who are not supposed to get it, will get it, but it is okay as long as these interventions are targeted towards an identified section of the society,” he said, asserting that freebies, as long as they are providing free education or free healthcare or income support, can be justified.
However, economists explain that in the long term, the politics of freebies can be dangerous for the finances of the states. Radhika Pandey explained that in order to deal with the expenses of the freebies, the states would have to take alternate measures or a combination of measures.
She explained that states may have to suppress capital expenditure, which would reduce employment potential. Or the debt burden would increase and the states would have to borrow more, leading to a rise in interest payments. Or they would have to increase their taxes to fund the additional expenditure, which would not be good for the state’s economy because it would reduce consumption.
A trend
While the freebie culture isn’t new. Wankhede explained that such promises were earlier often witnessed in states in the south of India.
“DMK and AIADMK often used to publicise these kinds of policies. Even in Andhra Pradesh, we saw N.T. Rama Rao’s government adopted this kind of policy framework. In Delhi, we saw similar promises from Kejriwal’s government. So, there was this kind of a trend,” he told ThePrint.
The rise of the Aam Aadmi Party (AAP) in New Delhi in 2015, on the back of promises to provide a certain amount of water and electricity free of cost to people, hurtled it into power. Keeping true to its promises, the AAP government then slashed power tariff by 50 percent for consumption up to 400 units a month and made water consumption free for households for up to 20,000 liters every month, days after coming into power in 2015.
Following this, in 2019, the Kejriwal government went on to introduce more schemes, from 200 units of free electricity to free bus rides for women. It implemented 300 units of free electricity in Punjab as well, after coming into power in 2022. Soon after, Prime Minister Narendra Modi passed the “revdi culture” remark to describe freebies offered by political parties, leading to criticism by several opposition leaders.
In its 2019 poll manifesto, the Congress also promised Rs 6,000 a month under its NYAY scheme—an amount much higher than the promises under PM-Kisan Samman Nidhi, which promised that “income support of Rs 6,000 per year in three equal installments will be provided to all land holding farmer families” in India. The Congress, though, failed to impress voters in 2019, despite promising a substantially larger benefit amount.
However, the Congress’s big victory in Karnataka early last year was largely attributed to a host of freebies it offered to people. The party had promised free bus rides for women, 200 units of free power, Rs 2,000 a month for every female head of the family, Rs 1,500 per month for every unemployed diploma holder, and Rs 3,000 a month for graduates, among others.
A change of heart
By November last year, the BJP began to ride the same freebie bus, making several promises ahead of the Rajasthan, Madhya Pradesh and Chhattisgarh elections.
Take Rajasthan for example. Both the Ashok Gehlot-led Congress government, as well as its principal challenger, the BJP went head-to-head in Rajasthan. While the former was banking on its populist schemes to return to power, the latter promised a host of freebies to match up as well.
In the run up to the elections, the Gehlot government announced up to 100 units of free electricity for all households in June last year. Then, on Independence Day, the state government also launched the Annapurna Food Packet Scheme which aims to distribute free food packets to over 1 crore families every month. The Congress also promised free laptops to first year undergraduate students of government colleges.
Meanwhile, the BJP promised free scooters to girls after Class 12, and saving bonds for the girl child. Its manifesto also promised Rs 450 subsidy on LPG cylinder for Ujjwala scheme beneficiaries and pledged to purchase wheat from farmers at an MSP of Rs 2800 per quintal— significantly higher than the current MSP of Rs 2015 per quintal.
In Madhya Pradesh, the ‘Ladli Behna Yojana’, under which Rs 1,250 is transferred to eligible women across the states was, among other things, credited for the BJP’s win in the state last year.
Wankhede explains that BJP was avoiding making such promises for a very long time.
“But Shivraj Singh Chouhan delivered on that front and now the Shiv Sena government also did the same thing in Maharashtra,” he told ThePrint, adding, “This trend is also suggesting that it can reap greater political benefits out of this policy.”
“How big it would be a burden on the exchequer and how big of a burden it would be on the budget, that nobody is talking about till now. And that can be a problem tomorrow,” he said, adding, “It will be a huge burden on the exchequer. There is a question on how they will deliver it, but there is some understanding that they will raise money for this probably out of the GST collection or by implementing more taxes.”
(Edited by Zinnia Ray Chaudhuri)
Also read: More aid for women, houses for ‘sons of soil’. Mahayuti, MVA neck and neck in battle of the freebies
